Howard, Latham clash over interest rates

Prime Minister John Howard has tried to deflect questions from Labor about the prospect of rising interest rates over the next 12 months.

The Reserve Bank governor last night told business leaders in Melbourne that interest rates were likely to rise over the next year but any increase would be modest and would aim to keep inflation in check.

During Question Time, Opposition Leader Mark Latham asked Mr Howard whether he agreed with that view and what impact rising interest rates would have on home buyers and small businesses.

"The governor of the Reserve Bank had a number of interesting things to say last night including some very relevant comments on the enduring strength of the Australian economy and the benefits to Australian home buyers as far as interest rates are concerned," he said.

"The Opposition has heard before - interest rates will always be lower under a Coalition government than under a Labor government."

However, Mr Latham says the Reserve Bank governor has blown the whistle with his assessment that interest rates are likely to rise over the next year.

"This indeed is a bell ringer for those Australians who are swayed by the Liberals' negative advertising campaign, that bombardment of advertisements on interest rates," he said.

"The reality is now setting in - the reality they've been trying to avoid by talking about other issues over the last five weeks.